Wisconsin’s water quality trading

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USGS Gage Station.

Overview

Water Quality Trading (WQT) may be used by Wisconsin Pollutant Discharge Elimination System (WPDES) permit holders to demonstrate compliance with water quality-based effluent limitations (WQBELs). Generally, water quality trading involves a point source facing relatively high pollutant reduction costs compensating another party to achieve less costly pollutant reduction with the same or greater water quality benefit. In other words, water quality trading provides point sources with the flexibility to acquire pollutant reductions from other sources in the watershed to offset their point source load so that they will comply with their own permit requirements. The Water Quality Trading How-To Manual [PDF] is available to help describe water quality trading and how to develop a successful trading strategy. Additional technical information as well as permitting information is available in the Guidance for Implementing Water Quality Trading in WPDES Permits [PDF].

Water Quality Trading vs. Adaptive Management: Although similar, water quality trading is not the same thing as adaptive management. Water quality trading can be used to comply with a range of pollutants, whereas adaptive management focuses on compliance with phosphorus WQBELs solely. Phosphorus trading and adaptive management may appear similar because both options allow point sources to take credit for phosphorus reductions within the watershed. Because the practices used to generate phosphorus reductions may be the same, these compliance options are often confused with one another.

Adaptive management and water quality trading have different permit requirements, however, making them different from a permitting and timing standpoint:

Adaptive management and trading have different end goals: Adaptive management focuses on achieving water quality criterion for phosphorus in the surface water; trading focuses on offsetting phosphorus from a discharge to comply with a permit limit.

Monitoring: Because adaptive management focuses on water quality improvements, in-stream monitoring is required under adaptive management; this is not required under trading.

Timing: Practices used to generate reductions in a trading strategy must be established before the phosphorus limit takes affect; adaptive management is a watershed project that can be implemented throughout the permit term.

Quantifying reductions needed: Trading requires trade ratios be used to quantify reductions used to offset a permit limit; the reductions needed for adaptive management are based on the receiving water, not the effluent, and trade ratios are not necessary in this calculation.

Eligibility: Adaptive management and trading have different eligibility.

Contact information: If you have questions, comments or feedback about phosphorus implementation, rule content, or adaptive management and water quality trading please email us.

History

In Wisconsin, legislative action in 1997 created three pilot areas for water quality trading to occur. These pilot areas were the Red Cedar River Watershed, the Fox and Wolf River Basin, and Rock River Basins. A successful phosphorus trading program was implemented in the Red Cedar River Watershed resulting from this opportunity. However, many facilities chose to comply with technology-based phosphorus limits at their facility, rather than utilizing trading, for economic reasons.
Now that facilities face more restrictive water quality-based effluent limits for phosphorus, and other pollutants, water quality trading may be a more economically preferable compliance option than facility upgrades or other compliance options. Additional legislative action occurred in 2011 to expand water quality trading throughout the state, and to provide the backbone of the water quality trading program currently available. See 283.84, Wis. State Stat., for more details on Wisconsin’s regulatory framework for water quality trading.

There are several other active and historic trading projects that have occurred throughout the nation; mainly occurring in watersheds with U.S. EPA approved Total Maximum Daily Loads (TMDLs). More information about these projects is available at http://water.epa.gov/type/watersheds/trading.cfm.

Contact information: If you have questions, comments or feedback about phosphorus implementation, rule content, or adaptive management and water quality trading please email us.

Implementing a Trade

Water quality trading is not a governmentally mandated program or regulatory requirement, but rather a market-based tool that enables some facilities to meet regulatory requirements more cost-effectively [Learn more about tools for implementing Water Quality Trading]. Two guidance documents are available to help describe the regulatory and procedural requirements of water quality trading:

The “Water Quality Trading How-To Manual” [PDF] was developed to inform external stakeholders including WPDES permit holders and their consultants as well as other interested entities about water quality trading, with an emphasis on developing a successful water quality trading strategy.

Once you have selected water quality trading as your preferred compliance option, submit the Notice of Intent [PDF] to your local DNR wastewater engineer, specialist, or water quality trading coordinator and begin developing the water quality trading plan.

Water Quality Trading Forms

Several water quality trading forms have been developed to streamline and organize record keeping and data submittals to DNR regarding trading. These forms include:

Contact information: Regional adaptive management coordinators are available to help address technical questions or concerns you have about adaptive management. If you have questions, comments or feedback about phosphorus implementation, adaptive management or water quality trading please email us.